Fond du Lac Band again denied Legacy tax funding

For the second time this fall, an Indian band has been denied its request for $1.7 million in Minnesota sales tax dollars to buy a lake and surrounding wetlands in northeastern Minnesota.

On Tuesday, Nov. 14, the Lessard-Sams Outdoor Heritage Council voted to not recommend funding for the proposal by the Fond du Lac Band of Lake Superior Chippewa.

The proposal -- the first request to use Minnesota Legacy Amendment tax dollars to protect natural habitat on sovereign land -- tapped into a litany of touchy issues surrounding tribal relations, from wolf hunting to how tribal members pay taxes.

Touchy as the issues are, however, the situation doesn't appear destined for a court battle, which seemed possible earlier in the fall.

"No, no, no," Karen Diver, chairwoman of the Fond du Lac Band, said when asked whether the band would sue. After the meeting, Diver said she was "disappointed" in the council's decision but encouraged by other parts of the discussion.

The Outdoor Heritage Council recommends to the legislature how to spend a portion of the three-eighths percent statewide sales tax hike approved by voters in the 2008 Clean Water, Land and Legacy Amendment. The money, expected to be about $92 million this year, is doled out to groups like Pheasants Forever and the Nature Conservancy for projects that can include buying land for permanent protection from development.

Tuesday's action amounted to the Outdoor Heritage Council reconsidering the Fond du Lac proposal after Diver objected to how it went down the first time.

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In a 7-5 vote on Sept. 21, the council denied the band's request, which would have gone toward purchasing a parcel within its reservation borders in St. Louis County. The land includes an 80-acre lake and 83 acres of wetlands, and the band's plan was to protect the land from development, manage it for fish and wild game, and open it to public hunting and fishing.

Several Outdoor Heritage Council members, including state Rep. Dennis McNamara, R-Hastings, objected to the fact that tribal members would retain their hunting and fishing treaty rights, which are not subject to state laws. Such sentiments prompted Diver to send a letter accusing the council of being "punitive and discriminatory."

On Tuesday, McNamara proposed that if additional money became available this year, the project should be funded -- a reversal of his position. "I wish I had been better informed the first time," McNamara said.

But McNamara was in the minority; several council members opposed the plan for a variety of reasons, some of which were different from those expressed in the September meeting. Jane Kingston, who supported the plan in September, opposed it Tuesday, arguing that it would set a bad precedent for the council.

"You should have listened to me the first time," Kingston said, chuckling, in a rib at McNamara. "But seriously, now I think the timing is wrong."

During its September meeting, the council made its picks for which projects should receive funding. To go back and add a new project now, Kingston argued, could invite similar appeals from other groups whose projects weren't funded.

But other arguments were in play as well.

Council member Ron Schara said the Indian sovereignty of the land was a concern.

"The issue for me was never hunting and fishing rights," Schara said. "The issue was buying land (to be placed in Indian trust). To illustrate my point, the Fond du Lac closed tribal lands to the wolf hunt. I don't think people who pay sales tax in Minnesota would want us to buy land that could be closed to hunting."

Diver said the decision to close tribe-owned land to wolf hunting -- because wolves are regarded as "our brothers" -- was unique.

"I know of no other species where this would be so disagreeable to us," she said. "Other species are meant to be taken."

When asked whether wolf hunting and trapping would be allowed on band-owned lands next year, Diver said she didn't know.

Council member Lester Bensch also raised the issue of sovereignty, questioning how property and sales taxes are collected and posing the following to Senate Counsel Greg Knopff, who advises the Outdoor Heritage Council: "They're not subject to the constitution and state laws, are they?"

"That's a little broad," Knopff replied.

Left unstated, at least not fully articulated Tuesday, was the question: Do Indian tribal members pay Legacy Amendment sales taxes?

The short answer: yes.

Through an agreement with a number of Indian groups, including the Fond du Lac, tribal members "pay all applicable taxes (sales, liquor, gas, cigarette) at the state tax rate, regardless of whether the sale is on or off the reservation," said Mark Pederson, an attorney with the Minnesota Department of Revenue.

"So the members pay just like anybody else," he said.

There is no reimbursement from the state of Minnesota to a tribal member for, say, a purchase made at Target.

However, not every penny of sales taxes collected from on-reservation transactions goes into the Legacy Amendment funds. Generally speaking, the pool of tax revenues collected for sales on the reservations is split 50-50 between state and tribal governments.

Diver urged council members to "not just focus on one pocketbook" but look at the larger Indian economic impact.

"We employ 2,200 people," she said. "We're the second-largest employer in St. Louis County. We contribute $110 million a year to the local economy. ... That's a real contribution."

The Fond du Lac proposal exposed a blind spot for the council, several council members acknowledged.

The council on Tuesday overwhelmingly voted to adopt an official position moving forward that "Indian self-governing harvest regulation shall not be considered" in evaluating future proposals.